1 Bruce F. Rinaldi CA Bar No. 55133 R. Joseph Barton CA Bar No. 212340 2 Cohen Milstein Sellers & Toll PLLC 1100 New York Avenue, N.W. 3 Suite 500, West Tower Washington, DC 20005 4 Telephone: (202) 408-4600 Facsimile: (202) 408-4699 5 Email: [email protected] Email: [email protected] 6 Michelle L. Roberts, State Bar No. 239092 7 Email: [email protected] Claire Kennedy-Wilkins, State Bar No. 231897 8 Email: [email protected] Cassie Springer-Sullivan, State Bar No. 221506 9 Email: [email protected] Springer-Sullivan & Roberts LLP 10 410 – 12th Street, Suite 325 Oakland, CA 94607 11 Telephone: (510) 992-6130 Facsimile: (510) 280-7564 12 Attorneys for Quiller Barnes, Plaintiff 13 14 UNITED STATES DISTRICT COURT 15 NORTHERN DISTRICT OF CALIFORNIA 16 SAN FRANCISCO DIVISION 17 18 QUILLER BARNES, Case No. 08-04058 MHP 19 Plaintiff, AMENDED COMPLAINT (CLASS ACTION) 20 v. 21 AT&T PENSION BENEFIT PLAN – NONBARGAINED PROGRAM, 22 Defendant. 23

24 Plaintiff, Quiller Barnes, by and through his counsel, alleges as follows: 25 INTRODUCTION 26 1. This is an action under the Employee Retirement Income Security Act of 1974, as 27 28 amended (“ERISA”), 29 U.S.C. § 1001, et seq. by Plaintiff, on behalf of himself and current and

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 1 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 former employees who were participants in the 1996 “Pacific Telesis Group Cash Balance

2 Pension Plan for Salaried Employees,” (“PTG Pension Plan”), effective July 1, 1996 (“PTG 3 Pension Plan Document”) -- which was subsequently merged into the SBC Pension Benefit Plan 4 – NonBargained Program (“SBC Pension Plan”) and later became a part of the AT&T Pension 5 Benefit Plan – Non-Bargained Program (“AT&T Pension Plan”) -- who terminated their 6 7 employment at a Participating Company after March 21, 1996, and were thereafter rehired by a 8 Participating Company on or before October 31, 1997 declaring that Class members are entitled

9 to have the Accelerated Transition Benefit (“ATB”) and the other benefits for which they are 10 eligible under PTG Pension Plan and the successor SBC Pension Plan recalculated and paid in the 11 manner provided under the applicable plan documents. 12 2. Pursuant to the terms of the PTG Plan, upon termination of employment 13 14 after March 21, 1996, participants were entitled to receive the greater of a cash balance benefit 15 (the “CB Benefit”) or an ATB, as calculated under the PTG Pension Plan. If the employee

16 terminated such employment prior to having attained 55 years of age and 30 years of service the

17 ATB available under the PTG Pension Plan was subject to a discount to reflect the fact that the 18 employee had not attained the age of 55 with a term of employment of at least 30 years (“ATB 19 Discount”). 20 3. Under the terms of the PTG Pension Plan, if an employee of a Participating 21 22 Company, after terminating his or her employment after March 21, 1996, and accepting an ATB, 23 which was subject to an ATB Discount, was subsequently rehired, the rehired employee was

24 entitled to an adjustment of the ATB Discount to reflect the rehired employee’s age and term of 25 employment at the time of his or her next termination (“Redetermined ATB”), provided the 26 employee had bridged his or her prior service by working at least five additional years after his or 27 her rehire (“Bridged Service”). The Redetermined ATB was to include an offset for any ATB 28

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1 payment already received under the PTG Pension Plan at the time of the prior termination. 2 4. In addition to the Redetermined ATB, a rehired employee was entitled to 3 receive a modified cash balance benefit based upon the allocations to the employee’s cash 4 balance account from the date of rehire to the date of the next termination (the “Modified CB 5 Benefit”) or, after 2001, a Career Average Minimum (“CAM Benefit”) if it was greater. 6 7 5. On information and belief, the PTG Pension Plan and the successor SBC

8 Pension Plan have been administered so that terminated employees, who cashed out their ATB

9 and were then rehired, at their next termination were only provided a Modified CB Benefit or, if 10 the termination was after 2001, a CAM Benefit if it was greater than the Modified CB Benefit, 11 without regard for whether they Bridged Service or not. Despite the fact that when such 12 employees Bridged Service and were entitled to a Redetermined ATB based upon their age and 13 14 term of employment at the time of their next termination to correct for the ATB Discount which 15 was incurred in calculating the ATB at their prior termination, no such Redetermined ATB was

16 provided to them as required under the terms of the PTG Pension Plan. By calculating the

17 benefits in such a manner, the Plan has denied thousands of dollars in pension benefits owed to 18 affected participants based upon the failure to administer the PTG Pension Plan and calculate 19 benefits in accordance with the Plan’s lawful terms. 20 6. Plaintiff respectfully asks the Court, inter alia: (1) to certify this case as a 21 22 class action; (2) to declare the Plaintiff and the Class have not had their benefits calculated and/or

23 paid under the PTG Pension Plan and the SBC Pension Plan in conformity with the terms of the

24 plan documents which govern those plans; (3) and to order the Defendant to administer the 25 AT&T Pension Plan in conformity with the terms of that Predecessor Plans by, among other 26 things, recalculating and paying the Plaintiff and members of the Class a Redetermined ATB in 27 conformity with the PTG Pension Plan by restoring to credit for the ATB Discount and such other 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 3 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 benefits discussed herein as to which Plaintiff and the Class are eligible.

2 JURISDICTION AND VENUE 3 7. Subject Matter Jurisdiction. This Court has subject matter jurisdiction 4 over this action pursuant to 28 U.S.C. § 1331 and ERISA § 502(a), 29 U.S.C. § 1132(a). 5 Personal Jurisdiction. This Court has personal jurisdiction over 6 8. 7 Defendant because it transacts business in, and has significant contacts with, this District, and

8 because ERISA provides for nationwide service of process. See ERISA § 502(e)(2), 29 U.S.C. §

9 1132(e)(2). 10 9. Venue. Venue is proper in this district pursuant to ERISA § 502(e)(2), 29 11 U.S.C. § 1132(e)(2), for at least the following reasons: 12 (a) Defendant has previously admitted that this District is an appropriate venue 13 14 in its Answer to Plaintiff’s initial Complaint; 15 (b) Defendant may be found in this District, as it transacts business in, and/or

16 has significant contacts with this District including because its participants earned and/or 17 earn some or all of their pension credits and receive(d) their pension payments in this 18 District; and/or 19 (c) The alleged breaches took place in this District because Plaintiff Barnes 20 and other class members who were denied the benefits sought through this action should 21 22 have received those benefits in this District. 23 PARTIES

24 10. Plaintiff Quiller (“Sonny”) Barnes is a former employee of Pacific Bell a

25 Participating Company in the PTG Pension Plan. Mr. Barnes was a participant in the PTG 26 Pension Plan, as defined in ERISA § 3(7), 29 U.S.C. § 1002(7), during his employment with 27 Pacific Bell. After the PTG Pension Plan merged with the SBC Pension Plan in 1999, Plaintiff 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 4 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 remained a participant in the successor SBC Pension Plan during his employment. Plaintiff

2 continues to have a colorable claim for benefits against the AT&T Pension Plan and therefore is a 3 participant as defined in ERISA § 3(7), 29 U.S.C. § 1002(7), with respect to the AT&T Pension 4 Plan, the successor to the SBC Pension Plan and the PTG Pension Plan. 5 11. Defendant AT&T Pension Plan is an “employee pension benefit plan,” 6 7 within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A) and is a “defined benefit plan,”

8 within the meaning of ERISA § 3(35), 29 U.S.C. § 1002(35). The PTG Pension Plan was

9 merged into the SBC Pension Plan in approximately 1999, which in turn was merged into and/or 10 became the AT&T Pension Plan following SBC’s acquisition of AT&T Corporation in 2005. As 11 the successor to the PTG Pension Plan, the AT&T Pension Plan, is liable for any and all benefit 12 obligations owed by the PTG Pension Plan to former participants of the PTG Pension Plan. 13 14 RELEVANT NON-PARTIES 15 12. AT&T, Inc. (“AT&T”) is a holding company incorporated in Delaware

16 with its principal place of business currently in Dallas, Texas. AT&T was previously known as

17 SBC Communications, Inc. (“SBC”) until SBC acquired AT&T Corporation in 2005 (which is 18 now a subsidiary of SBC/AT&T, Inc). As a holding company, AT&T conducts business through 19 various subsidiary companies, which are owned directly or indirectly by AT&T, including Pacific 20 Telesis Group, Inc. 21 22 13. Pacific Bell Telephone Company (“Pacific Bell”) is a California

23 Corporation with its principal place of business in San Francisco, California (d/b/a today as

24 “AT&T California”). Pacific Bell is an Incumbent Local Exchange Carrier (“ILEC”) as defined 25 by 47 U.S.C. § 251(h), and a telephone operating company that provides local exchange 26 telephone services and exchange access services in California. 27 28

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1 14. Pacific Telesis Group, Inc. (“PTG”) is one of the seven Regional Bell 2 Operating Companies (a/k/a “RBOCs” or “Baby Bells”). PTG is a Nevada Corporation with its 3 principal place of business San Francisco, California. Prior to 1997, PTG was a publicly traded 4 company. In 1996, PTG was the parent company of Pacific Bell and was the sponsor of the PTG 5 Pension Plan. In 1997, PTG was acquired by or merged with SBC. After the merger between 6 7 SBC and PTG in 1997, PTG remained a separate company wholly-owned by SBC and remains 8 the parent company of Pacific Bell. 9 CLASS ACTION ALLEGATIONS 10 15. Plaintiff brings this action as a class action pursuant to Rule 23 of the 11 12 Federal Rules of Civil Procedure on behalf of the following Class: 13 (1) Participants of the PTG Pension Plan, who meet the following requirements:

14 (a) who terminated their employment with a company that participated 15 in the PTG Pension Plan after March 22, 1996; 16 (b) who were eligible for a ATB, which, because they had not attained 17 the requisite age or years of credited service, was subject to an ATB 18 Discount, 19 20 (c) who were subsequently rehired by a company that participated in

21 the PTG Pension Plan on or before October 31, 1997, and worked at least

22 five additional years; and 23 (d) who, either (i) at their next termination, did not have their ATB 24 adjusted to reflect their age and term of employment at their next 25 termination of employment or (ii) are still employed at a Participating 26 27 Company. 28 (2) Beneficiaries of any of the persons described in Group 1.

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1 16. Numerosity. The members of the Class are so numerous that joinder of all 2 3 of members is impracticable. Plaintiff does not presently know precisely how large the Class 4 may be, but believes there may be hundreds of persons who satisfy the Class definition.

5 Additionally, the members of the Class are likely geographically disbursed across the States of

6 California and Nevada (where PTG, through its subsidiaries) provides telephone service. Finally, 7 Plaintiff has requested information about other persons who are similarly situated, but Defendant 8 has not yet produced such information. 9 17. Commonality. The claims in this case raise numerous questions of fact 10 11 and law that are and will be common to all members of the Class including the following:. 12 (a) The issues of liability are common to all members of the Class as those

13 issues concerning the interpretation of the provisions of the PTG Pension Plan Document as 14 they apply to the Class. 15 (b) The issues regarding the relief are also common to the members of the 16 Class as the amount of relief will be based on benefits calculated in conformity with the 17 proper interpretation of the Plan and the amount to which the members of the Class are 18 19 entitled to make them whole for past failures to properly interpret and apply the provisions

20 of the PTG Pension Plan Document in calculating their benefits.

21 18. Typicality. Plaintiff’s claims are typical of the claims of Class members, 22 and therefore satisfy the requirements of Fed. R. Civ. P. 23(a)(3). They do not assert any claims 23 relating to the Plan in addition to or different than those of the Class. 24 19. Adequacy. Plaintiff will fairly and adequately represent and protect the 25 26 interests of the members of the Class because of the following reasons: 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 7 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 a. Plaintiff has no interests antagonistic to or in conflict with the interests of

2 the Class 3 b. Defendant has no unique defenses against the Plaintiff that would interfere 4 with Plaintiff’s representation of the class. 5

6 c. Plaintiff has engaged counsel with extensive experience prosecuting class 7 8 actions in general and ERISA class action litigation experience and 9 expertise.

10 20. Rule 23(b)(1)(B). The requirements of Fed. R. Civ. P. 23(b)(1)(B) are satisfied 11 because the primary issues in this case involve questions concerning the interpretation of the 12 terms of the Plan. As the Plan Administrator must interpret the plan consistently as to all 13 similarly situated participants, resolution of this question in this litigation, as a practical matter, 14 would be dispositive of the interests of the other members of the Class or substantially impair or 15 16 impede their ability to protect their interests.

17 21. Rule 23(b)(1)(A). The requirements of Fed. R. Civ. P. 23(b)(1)(A) are also

18 satisfied because the Plan Administrator has a legal obligation to interpret the terms of the plan 19 consistently for all similarly situated participants. As one of the primary issues in this case 20 involves the interpretation of the terms of the Plan, conflicting interpretations of the same plan as 21 to similarly situated participants creates the risk of establishing incompatible standards of conduct 22 23 for the Plan and its administrator.

24 22. Rule 23(b)(2). The requirements of Fed. R. Civ. P. 23(b)(2) are met in this action

25 because the Plan Administrator is required to interpret the Plan consistently as to similarly 26 situated participants, and as a result, the Plan’s actions affected all Class members in the same 27 28

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1 manner making appropriate final declaratory and injunctive relief with respect to the Class as a

2 whole. 3 23. Rule 23(b)(3). Alternatively, the requirements of Fed. R. Civ. P. 23(b)(3) are met 4 in this action because (a) the questions of law and/or fact, including the proper interpretation of 5 the terms of the PTG Plan, are not only common, but will predominate over any individual 6 7 questions and (b) a class action is superior to other available methods for the fair and efficient 8 adjudication of this litigation.

9 FACTUAL ALLEGATIONS

10 24. In the early to mid 1990s, PTG was experiencing significant changes as a 11 result of changes to the telephone industry. The pension benefits which were offered to the 12 participants in the PTG Pension Plan in 1996, such as Plaintiff and members of the Class, were a 13 product of and/or result of these changes. 14 15 A. The Restructuring and Workforce Reduction of PTG 16 25. Beginning as early as 1994, PTG was undergoing a significant

17 restructuring and related workforce reduction because of changes to and increased competition in 18 the telecommunications industry. 19 26. On January 7, 1994, Bloomberg, L.P. reported: 20 Pacific Telesis Group said it will cut 10,000 more jobs at its Pacific Bell unit in 21 another move by a regional Bell company to slash costs in the face of increasing 22 competition in the local telephone market.

23 The job cuts, which will reduce Pacific Bell’s workforce by 18% over four years, are in additional to 9,500 jobs the unit has eliminated since 1990. . . . 24 The job cuts are another blow to California’s sagging economy. Pacific Bell is 25 California’s largest employer, with 54,000 employees as of September 30. 26 The 10,000 job cuts may not be enough for Pacific Bell analysts said. The cuts 27 are “not all that aggressive, relative to what may be needed to be competitive,” said Blake Bath, a telecommunications analyst at Sanford Bernstein. “As the 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 9 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 magnitude of the competitive situation come more clearly into focus, these numbers will probably increase.” 2 3 Colleen M. McElroy, Pacific Telesis to Cut 10,000 More Jobs, Take Control, January 7, 1994, 4 Bloomberg, L.P.

5 27. As a result of the contemplated workforce reduction PTG reported in its 1995 6 Form 10-K filed with the Securities and Exchange Commission that PTG was taking a $977 7 million charge on its books to cover the incremental severance costs associated with the 8 terminating more than 14,000 employees from 1994 through 1997. 9 10 28. On information and belief, the employment of more than 10,000 employees of 11 PTG (or its subsidiaries and affiliates) were terminated between 1994 and 1997.

12 29. On information and belief, a significant number of the employees whose 13 employment was terminated, including Plaintiff Barnes, were participants in the PTG Pension 14 Plan at the time of their termination. 15 30. On information and belief, at the time of the termination of these employees in 16 1994 through 1997, it was anticipated that a significant number of employees would likely be 17 18 subsequently rehired.

19 31. On information and belief, a significant number of employees whose employment

20 was terminated as part of the restructuring and related workforce reduction between 1994 and 21 1997, including Plaintiff Barnes, were subsequently rehired by PTG (or one of its subsidiaries or 22 affiliates). 23 32. On information and belief, a significant number of the employees who were 24 25 rehired by PTG (or one of its subsidiaries or affiliates) again became participants in the PTG

26 Pension Plan. 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 10 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 B. Pacific Telesis Group Pacific Telesis Group Cash Balance Plan 2 33. As part of PTG’s restructuring PTG reported in its 1996 Form 10-K that a 3 variety of special pension benefits and cash incentives had been initiated to facilitate the 4 workforce reduction. 5 As a cost cutting measure, PTG announced in its 1996 Form 10-K that 6 34. 7 effective as of July 1, 1996, The Pacific Telesis Group Salaried Pension Plan (the “PTG Salaried

8 Plan”) had been converted from a “final pay” defined benefit pension plan into a “cash balance”

9 defined benefit pension plan. 10 35. Under the terms of the PTG Salaried Plan, a participant was entitled to 11 receive pension benefits when certain age and service requirements were met (the “Service 12 Pension”). For those employees who had not reached the age of 55 with 30 years of service the 13 14 benefits available under the Service Pension were subject to a substantial age discount.

15 36. PTG reported in its 1996 10-K that as part of the incentives offered under

16 the workforce reduction program as of March 28, 1994, Pacific Bell began offering a “special 17 pension benefit that removed any age discount from pensions for management employees who 18 were eligible to retire with a service pension on that date.” 19 37. In 1996, in connection with the workforce reduction program even more 20 21 generous incentives were offered to employees of Pacific Bell. One of the generous incentives 22 offered to employees of Pacific Bell in connection with workforce reduction program was a

23 modification of the Service Pension formula. 24 38. Under the terms of the new PTG Pension Plan, the Service Pension formula 25 was replaced by the greater of the CB Benefit or an ATB. According to a booklet distributed to 26 employees by Pacific Bell on August 19, 1996 (a copy of the transmittal letter produced in this 27 litigation as ATTP00260) entitled “Important Changes to Your Pension Benefits” (“PTG Plan 28

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1 Booklet”), for many employees the ATB provided a greater benefit than the Service Pension

2 formula. 3 39. The PTG Plan Booklet provided a summary of the pension benefits under 4 the PTG Pension Plan. 5 The PTG Plan Booklet described the New CB Benefit and the ATB as 6 40. 7 follows: 8 The Cash Balance Benefit

9 We’re changing from our traditional plan formula to a more flexible and competitive cash balance formula. It works much like a savings plan except that 10 the company pays all – you don’t contribute to the plan. You will receive regular account statements, just as you do now for the Savings Plan. 11 The plan is still a “pension plan”: most provisions remain the same. The plan 12 continues to be funded by the existing Pacific Telesis Group pension trust and benefits continue to be insured by the Pension Benefit Guaranty Corporation 13 (PBGC).

14 The Accelerated Transition Benefit

15 We’ve also created an “accelerated” benefit that offers an opportunity for increased benefits to many managers who leave the company over the next few 16 years. The accelerated transition benefit preserves your benefit earned to date while accelerating the accrual of benefits that would not otherwise be available 17 until some time in the future. The benefit reductions for early retirement are now more favorable for you. 18 The accelerated transition benefit works as a minimum benefit: you are entitled 19 to the greater of the benefit from the cash balance formula or the accelerated transition formula. For most employees, this represents a significant, immediate 20 improvement over the benefit you had under the old pension formula.

21 41. The PTG Plan Booklet, which compares the benefits available under the

22 old Service Pension formula with the benefits available under the New CB Benefit formula 23 and the ATB, does not explain what would happen in the event a participant of the PTG 24 Pension Plan terminates his or her employment and was subsequently rehired. 25 C. The PTG Pension Plan Benefit Binder 26 27 42. On or about June 15, 1996, a Binder of Summary Plan Descriptions

28 (“SPD”) for all of the benefit plans offered to the employees of Participating Companies,

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1 including Pacific Bell, by PTG (the “PTG Benefits Binder”) was distributed to employees of

2 Pacific Bell. 3 43. The PTG Benefits Binder includes the following statement (emphasis 4 added) at the beginning of the binder: 5 The summaries in this binder describe only the highlights of the various plans. 6 They do not attempt to cover all details. The details are contained in the official plan texts and the service contracts with the various insurance carriers and 7 trustees, which legally govern the operations of the plans. If there should be any difference between the descriptions included here and the details in the legal 8 plan documents, the legal plan documents will be the ruling documents in all cases. 9 Tab 10 of the PTG Benefits Binder, pages 10-1 through 10-38, contains or 10 44. 11 constitutes a Summary Plan Description (“SPD”) of the Pacific Telesis Group Cash Balance

12 Pension Plan as of 1996. Tab 10 of the PTG Benefits Binder, pages 10-1 through 10-38, do not

13 constitute the written instrument, within the meaning of ERISA § 402, 29 U.S.C. § 1102, of the 14 PTG Pension Plan or any other ERISA pension plan. 15 45. After describing the CB Benefit and the ATB and providing examples of 16 how the benefits were to be calculated, the Benefit Binder at Tab 10, page 10-17, explained that 17 18 whether a participant receives a CB Benefit or an ATB when he or she terminates his or her 19 employment “[y]ou select the form of your benefit payment. You may elect to receive your

20 benefit as: a single sum cashout, or an annuity, payable for your lifetime . . .” 21 46. The PTG Benefits Binder at page 10-30 summarized the benefits to which 22 a participant was entitled if he or she terminated his or her employment, accepted an ATB and 23 was then rehired as follows: 24 Rehires with Accelerated Transition Benefits 25 If you are rehired after June 30, 1996 and have an Accelerated Transition 26 Benefit, the Annuity Start Date for that benefit was fixed as the day after your prior termination. If you took a cashout of the benefit, it will be disregarded for 27 future pension benefits. If your Accelerated Transition Benefit was taken as an annuity, it is suspended at rehire and resumed at the next termination of 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 13 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 employment with no change in election or amount unless your service is bridged. In that case there may be an adjustment to your Age/Service Discount (using 2 the discount provisions of the plan before March 22, 1996), a new Annuity Start Date and a new election of the form of payment. (emphasis added). 3 D. The Applicable Provisions of the Official Plan Document: The 1996 Pacific Telesis 4 Group Pacific Telesis Group Cash Balance Plan, effective July 1, 1996

5 47. The written instrument, within the meaning of ERISA § 402, 29 U.S.C. § 6 1102, pursuant to which the PTG Pension Plan was established and/or maintained effective July 7 1, 1996 through October 31, 1997, is the PTG Pension Plan Document (produced in this litigation 8 as ATTP001075-1215). 9 In contrast to the summary description in the PTG Benefits Binder, the 10 48. 11 PTG Pension Plan Document explains in detail the benefits available to participants of the PTG

12 Pension Plan and how such benefits were to be calculated.

13 49. Section 3.4 of the PTG Pension Plan Document entitled “Rehired 14 Employees” governs the benefits available to rehired employees. 15 50. In the situation where an employee terminated his or her employment on or 16 after March 21, 1996, such an employee was eligible for an ATB, and if the employee was then 17 18 rehired with PTG (or one of its participating subsidiaries or affiliates) and resumed participation

19 in the PTG Pension Plan, the PTG Pension Plan Document provides as follows:

20 3.4(d) Prior Benefit Based on Termination After March 21, 1996/Participation Resumed. If the Employee’s prior Termination of 21 Employment occurs on or after March 22, 1996, the Employee’s Plan benefit at the Annuity Start Date Following the Employee’s next Termination of 22 Employment will be determined as follows:

23 * * *

24 (3) If the Employee was receiving, or was eligible to receive, a monthly pension under the accelerated transition benefit formula at his or her 25 prior Termination of Employment, the Employee’s Plan benefit at the Annuity Start Date(s) following his or her next Termination of Employment will be 26 equal to (x) plus (y) where:

27 (x) is the monthly benefit payable at the Employee’s prior Termination of Employment under Section 5.1, except that if the prior benefit 28

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1 was subject to an age discount under Section 5.2, and the Employee’s service is bridged under Section 7.4(a), the benefit will be adjusted to reflect the 2 Employee’s age and Term of Employment under Section 7.7 at the Employee’s next Termination of Employment; and 3 (y) is the monthly cash balance benefit under Section 4.5(b) 4 based on allocations to the Employee’s Account from the Employee’s rehire date to the Annuity Start Date that applies to the cash balance benefit. 5 If the benefit described in clause (x) above is adjusted for early payment 6 discount because of bridged service, a new Annuity Start Date and Election Period will apply to the redetermined benefit . . . . (emphasis added) 7

8 51. The “discount” which is referenced in Section 3.4(d)(3)(x) of the PTG 9 Pension Plan Document is defined in Section 5.2 of the PTG Pension Plan Document. 10 52. Pursuant to Section 5.2, if an employee eligible to receive an ATB had not 11 attained a certain age and term of employment at the time or his or her termination the ATB was 12 subject to a discount calculated as follows: 13 14 Section 5.2 Early Payment Discount

15 An early payment discount will be applied to a Participant's accelerated transition benefit based on the Participant's age and Term of Employment at his or her 16 Annuity Start Date as follows: 17 5.2(a) No Discount. No early payment discount applies if (i) the Participant's 18 Term of Employment is at least 30 years; (ii) the Participant is at least 55 with a Term of Employment of not less than 20 years; or (iii) the Participant is at least 19 65 and vested.

20 5.2(b) Less Than 55 and 20. A discount equal to one-twelfth of two percent 21 (1/12 of 2%) will apply for each full or partial month down to age 50 prior to the date on which the Employee is at least 55 with a Term of Employment not less 22 than 20 years or, if earlier, the date on which the Employee is at least 65 with a Term of Employment of not less than five years. 23 5.2(c) Less Than 50. If the Participant is less than 50 at his or her Annuity Start 24 Date, an additional discount equal to one-twelfth of four percent. 25

26 53. In order for a rehired employee, who was eligible for an ATB, which was

27 discounted pursuant to Section 5.2 of the PTG Pension Plan Document at his or her prior 28

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1 termination, to recover the “early payment discount” and receive a Redetermined ATB “adjusted

2 to reflect the Employee’s age and Term of Employment” at the employee’s next termination of 3 employment, as provided under Section 3.4(d)(3)(x) of the PTG Pension Plan Document, the 4 employee’s service had to be “bridged” under Section 7.4(a) of the PTG Plan. 5 54. Section 7.4 of the PTG Pension Plan Document entitled “Bridging of Prior 6 7 Service” provides as follows: 8 7.4(a) General Rule. Service prior to the following absences is included in a Participant's Term of Employment . . . . 9 * * * * * 10 (2) An absence of any length, provided the individual completes five 11 years of continuous service after returning from the absence, and the individual had completed six months of continuous service before the absence. 12

13 55. If a rehired employee met the requirements of Section 7.2 for Bridged

14 Service and became eligible for a Redetermined ATB under Section 3.4(d)(3)(x), adjusted to 15 reflect the employee’s age and term of employment at the employee’s next termination of 16 employment, the Redetermined ATB would be subject to an offset, for any previous cashout 17 payment the employee received at the time of the prior termination of employment. 18 19 56. The Section of the PTG Pension Plan Document which addresses the offset 20 for a prior cashout payment is Section 3.13 which provides as follows:

21 Section 3.13 Effect of Prior Cashout on Plan Benefit

22 If an Employee’s Term of Employment for purposes of benefit accrual determined as of June 30, 1996 includes service for which the Participant 23 received a cashout payment under the Plan, or under the Pacific Telesis Group Pension Plan or an Interchange Company Pension Plan, the Participant’s current 24 Plan benefit at the next Termination of Employment, to the extent based on a Participant’s Term of Employment, will be reduced by offsetting the current 25 benefit payable as an immediate annuity by the immediate annuity that was previously cashed out. 26 27 28

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1 57. Under the PTG Pension Plan, a participant who terminated his or her 2 employment after March 22, 1996, and was then rehired by the PTG, at the time of the 3 employee’s next termination, was entitled to the following pension benefits under the PTG Plan: 4 (i) If the employee was eligible for an ATB at his or her prior termination which was 5 adjusted for an early payment discount and the employee bridged his service by continuing to be employed for five or more years following his rehire, a 6 Redetermined ATB adjusted to reflect the employee’s age and term of 7 employment at his next termination, offset by the ATB received at the prior termination; and 8 (ii) A Modified CB Benefit based on the allocations to the employee’s cash balance 9 account from the employee’s rehire date to the Annuity Start Date of the Modified CB Benefit. 10 11 58. After Plaintiff had been rehired by Pacific Bell the PTG Plan was amended 12 on October 21, 1997, to modify the benefits available to terminated employees rehired after 13 October 31, 1997. The October 21, 1997 amendment does not affect Plaintiff and members of the 14 Class who were rehired before the effective date of the amendment. 15 16 59. A summary attached to the executive resolution approving the amendment

17 (produced in this litigation as ATTP001157) described the benefits to which employees who were

18 terminated on or after March 22, 1996 and rehired before October 31, 1997, were entitled under 19 the PTG Pension Plan as follows: 20 The benefits of employees rehired during the period beginning March 22, 1996 21 and ending October 31, 1997 shall continue to be determined under the current rules. These provide for a benefit equal to the sum of the benefit frozen at the 22 rehire date, adjusted (if the employee’s service is bridged) for a redetermined 23 early payment discount, if applicable, at the next termination of employment plus the cash balance benefit accrued from the rehire date. (emphasis added) 24 E. The Plaintiff’s First Term of Employment With Pacific Bell from 1973 to 1996 25 60. Plaintiff Barnes was employed by Pacific Bell from 1973 to October 29, 26 27 1996, at which time the Plaintiff voluntarily terminated his employment with the Company

28 (“Plaintiff’s First Termination”).

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 17 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 61. Shortly after the PTG Pension Plan became effective on July 1, 1996, the 2 Plaintiff received a letter from PTG on July 19, 1996, transmitting a statement of Pension 3 Benefits available to the Plaintiff under the newly announced PTG Plan. The letter (produced in 4 this litigation as QB000229) stated in part as follows: 5 Attached is your personalized statement of pension benefits under the Pacific 6 Telesis Croup Cash Balance Pension Plan. This statement shows your benefit amounts as of July 1, 1996 and should assist you with financial planning. 7 Your benefit from the Pension Plan will be the greater of your Accelerated 8 Transition Benefit or your Cash Balance account, whichever is greater at the time you leave the company. The Old Formula Benefit is provided solely as a 9 comparison -- it is no longer a payable benefit. * * * * * 10 Many employees have asked if they may terminate employment, take a cashout and then be rehired by the same or another Pacific Telesis Group Company. 11 Former employees may not be rehired by any Pacific Telesis Group Company, which participates in this pension plan within six months following the 12 employee's termination.

13 A statement showing your actual Accelerated Transition Benefit will be sent to you in January, 1997, along with your first quarterly statement showing Cash 14 Balance activity from July through December, 1996. Any differences between this estimate and the final numbers would be due to adjustments to your years of 15 service or pay. Later this year, your employer will be providing Prudential with pay through the end of June for use in updating this estimate. 16 17 62. The July 19, 1996 letter attached an “Estimate of Pension Benefits” dated

18 July 1, 1996, (produced in this litigation as QB000228) which calculated the monthly annuity

19 available to Mr. Barnes under the ATB at $1,813.03 and under the CB Benefit at $682.42. The 20 “Lump Sum” cashout for the ATB was $305,994.51 and the cashout for the CB Benefit was 21 $115,171.17. The Estimate of Pension Benefits under the ATB contained the following 22 explanation: “Your age reduction on 7/1/96 is 17.67%. Your reduction for age is gradually 23 24 eliminated over the period ending 01/14/2003 when you are 54Y 07M 23D with 30Y 00M 00D 25 of service.”

26 63. After Plaintiff’s First Termination he received a Final Pension Benefit 27 Calculation on November 18, 1996 (produced in this litigation as QB000230-31), which 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 18 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 computed his ATB benefit through October 29, 1996. According to the Final Pension Benefit

2 Calculation, Plaintiff’s “Cashout Age” as of the date of First Termination was 48 years and 5 3 months and he was not eligible to receive an “Unreduced Benefit” until May 21, 2003, at which 4 time Plaintiff would have reached 55 years of age. After taking into account a “Total Discount” 5 of 16.33% to reflect his Cashout Age of 48 years and 5 months, the Final Pension Benefit 6 7 Calculation computed the ATB he was eligible to receive as a “Single Life Annuity” at $1,842.54 8 per month or $309,878.38 if taken as a lump sum “Cashout Benefit.”

9 64. Plaintiff opted for a lump sum Cashout Benefit instead of an annuity. 10 F. Plaintiff’s Second Term of Employment With Pacific Bell and SBC 11 65. After terminating his employment with Pacific Bell on October 29, 1996, 12 Plaintiff was rehired by the Company six months and two days later, on May 1, 1997, with the 13 14 same job title, Supervisor in the Network and Services Group and became reenrolled in the PTG 15 Plan.

16 66. On June 30, 1997, Plaintiff received a Statement of Pension Benefits from 17 the PTG Plan (produced in this litigation as ATTP00191-94). The Statement of Pension Benefits 18 showed a “Net Credited Service Date” of May 1, 1997 and showed a lump sum CB Benefit of 19 $457.24 and a Lump Sum ATB of $222,414.83. The Statement contained the following “Special 20 Notes” explaining the benefit: 21 22 Your benefit is not payable until you are a participant in the salaried pension plan and you have completed five or more years of service. 23 If you were vested at your previous termination date, you only need to meet the participation requirements. 24 25 These calculations bridge your past service only for purposes of your pension benefits. Your Net Credited Service will not be adjusted for other benefits 26 (e.g. Vacation) until you meet the five year bridging requirements.

27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 19 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 67. At the end of each calendar Quarter for the next year and a half until 2 December 31, 1998, Plaintiff received a similar Statement of Pension Benefits (produced at 3 ATTP00193-205), including the same Special Notes of explanation, as the statement described in 4 the preceding paragraph. Each calendar Quarter, the CB Benefit and ATB increased in value 5 until by December 31, 1998, the lump sum value of the CB Benefit had reached $4,995.74 and 6 7 the ATB had reached $280,600.26.

8 68. Beginning in the First Quarter of 1999, following the merger of the PTG

9 Pension Plan and the SBC Pension Plan, Plaintiff received account statements reporting the CB 10 Benefits and ATB available to the Plaintiff from the SBC Savings Plan/SBC Pension Benefit Plan 11 (the “SBC Statement”). As of March 31, 1999, the SBC Statement (produced in this litigation as 12 ATTP00207-22) reported a closing balance on the CB Benefit of $6,115.48 and a closing balance 13 14 on the ATB of $284,212.69. 15 69. On October 2, 2000, the SBC Pension Service Center (“SBC Pension

16 Service Center”) sent Plaintiff an estimate of Pension Benefit under the SBC Pension Plan 17 (produced in this litigation as ATTP00223-24) which, without explanation, estimated that the 18 Plaintiff was entitled to an immediate lump sum payment of at least $342,267.15. 19 70. After the PTG Pension Plan was merged into the SBC Pension Plan in 20 21 1999 any benefits to which rehired employees of Pacific Bell were entitled under the PTG 22 Pension Plan were to be paid from the SBC Pension Plan’s trust fund.

23 71. The benefits to which rehired employees of Pacific Bell and other 24 participating companies in the PTB Pension Plan were entitled, however, were governed by the 25 provisions of the PTG Pension Plan, including the requirement for bridged service. 26 72. Supplement No. 1 to the SBC Pension Plan, entitled “Merger of Pacific 27 Telesis Group Cash Balance Pension Plan for Salaries Employees into the Nonbargained 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 20 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 Program,” applies to any individual who, like the Plaintiff and the members of the Class, was an

2 employee of a participating company in the PTG Pension Plan as of December 31, 1999. 3 73. Section 1.5 of Supplement No. 1 (produced in this litigation as 4 ATTP00814) provides as follows: 5 Sl .5 Prior Benefit Accruals 6 All benefits accrued under the provisions of the PTG Plan prior to January 1,1999 and 7 transferred to the Nonbargained Program effective January 1,1999, shall continue to be governed, with respect to current employees, under the provisions of the PTG Plan in 8 effect as of December 31, 1998, and with respect to former employees, under the provisions of the PTG Plan in effect when the former employee terminated employment 9 under the Plan, as such provisions are amended, subject to any subsequent amendments. (emphasis in original) 10 G. Plaintiff’s Bridged Service 11

12 74. At the time Plaintiff was rehired by Pacific Bell he was sent a letter on May 13 13, 1997 (produced in this litigation as ATTP00191), which stated in part as follows: 14 We have been notified of your rehire with Pacific Bell on 05-01-97. Due to your 15 rehire the following changes will impact your retiree benefits:

16 Pension: Upon your termination from active employment, with Pacific Bell or its subsidiaries, your pension will be calculated to determine if you are entitled to 17 any additional benefits under the Cash Balance Plan.

18 75. Attached to the May 13, 1997, letter was a “Notice Of Dates Established

19 For Continuous Service And Net Credited Service” (produced in this litigation as ATTP00192) 20 which informed the Plaintiff when he would successfully bridge his prior service with Pacific 21 Bell. Item #1 of the Notice, stated that the “Date Established For Your Continuous Service 22 Under The Benefit Plan” was May 1, 1997. Item #5, then listed Plaintiffs’ prior term of 23 24 employment with Pacific Bell from January 15, 1973 to October 29, 1996, as “Periods Of Bell 25 System Service Before Date Shown In Item 1 Which Will Be Credited When You Complete Five

26 Years Of Continuous Service.” 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 21 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 76. As reflected by an internal record maintained by the SBC Benefit Plan 2 Committee (produced in this litigation as ATTP00083), Plaintiff contacted the SBC Pension 3 Service Center on or about January 11, 2002, to inquire as to when his service would be bridged 4 and “ was advised that he would have to work five continuous years in order for previous service 5 to be bridged.” 6 7 77. In a letter to Plaintiff from the SBC Pension Service Center dated June 5,

8 2002 (produced in this litigation as ATTP00087), the SBC Pension Service Center advised

9 Plaintiff that his “Net Credited Service Date” was July 17, 1973. 10 78. On October 29, 2002, five years after being rehired by Pacific Bell, 11 Plaintiff bridged his prior service pursuant to Section 7.4(a) of the PTG Pension Plan Document 12 and was entitled to have his prior service from January 15, 1973 to October 29, 1996, included in 13 14 his Net Credited Service in the calculation of any benefits for which Plaintiff was eligible under 15 the PTG Pension Plan.

16 79. After successfully bridging his 23.5 years service prior to Plaintiff’s First 17 Termination, and receiving a Net Service Credit Date of June 17, 1973, Plaintiff completed 30 18 years of credited service under the PTG Pension Plan on or about June 17, 2003. 19 EXHAUSTION 20 A. Plaintiff’s Request for an ATB Pension Benefit 21

22 80. An internal SBC Pension Service Center document (produced in this 23 litigation as ATTP00084) indicates that on August 8, 2003, Plaintiff requested a manual 24 calculation of his benefit, including the ATB, which he had successfully bridged. 25 26 81. On September 9, 2003, the SBC Pension Service Center provided Plaintiff 27 with a Career Average Minimum Retirement Calculation Summary (produced in this litigation as 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 22 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 ATTP0088-89) which estimated that Plaintiff was eligible to receive a lump sum CAM benefit of

2 $71,218.22. Although the Plaintiff qualified for Bridged Service under the PGT Pension Plan, 3 the CAM Benefit under the SBC Pension Plan as calculated on a worksheet attached to the 4 Retirement Calculation Summary did not give Plaintiff any credit for service prior to December 5 31, 1999. 6 7 82. The Retirement Calculation Summary and the attached worksheet did not

8 contain any reference to or calculation of the Redetermined ATB to which Plaintiff was entitled

9 after bridging service under Section 3.4(d)(3)(x) of the PTG Pension Plan Document. 10 83. The CAM Benefit referenced in the September 9, 2003, Retirement 11 Calculation Summary was a benefit provided under the successor SBC Pension Plan, but was not 12 a benefit which existed under the PTG Pension Plan. 13 14 84. On information and belief, in September 2001, SBC froze all cash balance 15 accounts in the SBC Pension Plan, including the Modified CB Benefit available to former Pacific

16 Bell employees under the PTG Pension Plan, and instituted a common management pension 17 formula for all full service employees, including the non-salaried Pacific Bell employees who 18 previously were potentially eligible for both a Modified CB Benefit and an ATB under the PTG 19 Pension Plan. The newly instituted SBC pension formula was called the Updated Career 20 Average Minimum or “CAM” Benefit. 21 22 85. A Summary of Material Modifications (“SMM”) circulated by SBC in

23 November 2004 described the new CAM Benefit formula as follows (at ATTP00997):

24 The Updated Career Average Minimum (CAM) Benefit: This is an annual 25 annuity equal to 1.6% times your pension eligible earnings paid over .your entire career while covered by the SBC Nonbargained Program. Note: For 26 years before calendar year 2000, you are credited with pension eligible earnings for each year that are equal to the average pension eligible earnings 27 for the period from 1995 through 1999. (emphasis in original)

28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 23 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 86. Despite the fact the Modified CB Benefit under the PTG Pension Plan was 2 altered by the adoption of the newly instituted CAM Benefit, the SMM made it clear that former 3 participants of the PTG Pension Plan were still eligible to receive an ATB under the successor 4 SBC Pension Plan by stating as follows (on ATTP01030): 5 If you were a Salaried Employee of a Pacific Telesis Participating Company 6 on March 22, 1996 who was also a Participant in the Pacific Telesis Group Pension Plan for Salaried Employees at any time between March 22, 1996 and 7 June 30, 1996, then you are eligible for an Accelerated Transition Benefit (ATB) pension calculation. If you are eligible for the ATB, the benefit was calculated as 8 of June 30, 1996. If you are an employee who earned an Accelerated Transition Benefit (ATB) and you were still employed by an SBC Participating Company on 9 January 1, 1999, you are also entitled to receive an alternative pension benefit calculation called the Special ATB. 10 The CAM benefit estimated on September 9, 2003, was significantly less 11 87. 12 than the ATB estimated benefits which Plaintiff had received between June 30, 1997 and October

13 2, 2000

14 88. Following Plaintiff’s receipt of the CAM benefit estimated on September 9, 15 2003, Plaintiff’s legal counsel sent a letter on December 8, 2003, to the SBC Pension Service 16 Center requesting an explanation as to why Plaintiff had been informed by the SBC Pension 17 Service Center that he did not qualify for a Redetermined ATB. Among other things the 18 19 December 8, 2003 letter stated: 20 The “Pacific Telesis Group Cash Balance Pension Plan," dated July 1996, provides that Mr. Barnes can bridge his employment to his previous years of 21 service. The plan requires an employee to work for an additional five (5) years of service Mr. Barnes met this requirement on July 17, 2003. Because Mr. 22 Barnes was a vested employee at his previous date of termination Mr. Barnes' bridged employment totaled thirty (30) years of service. Because Mr. Barnes met 23 the requirement for vesting and bridging, he is entitled to his full Accelerated Transition Benefits (ATB). 24 89. When Plaintiff failed to receive an adequate response to the December 8, 25 2003 letter, Plaintiff sent a letter to the SBC Pension Service Center on May 5, 2004, appealing 26 27 the September 9, 2003, benefit estimate (the “Benefit Claim Letter”). 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 24 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 90. On June 25, 2004, shortly after appealing the benefit estimate, Plaintiff 2 terminated his employment with SBC. The SBC Pension Service Center calculated the lump sum 3 value of his CAM benefit after his rehire in 1997 as $75,303.40. 4 91. On July 15, 2004, Plaintiff received Retirement Calculation Summary from 5 the SBC Pension Service Center, which calculated his pension benefit as of June 25, 2004 and 6 7 calculated his total pension benefit to be a CAM Benefit of $74,884.38. The summary contained

8 the following chart under the statement “Calculation Results”:

9 . . . your Pension Benefit under the Plan has been determined as follows:

10 1. Cash Balance Benefit $29,407.03 2. Accelerated Transition Benefit $0.00 11 3. Special Accelerated Transition Benefit1 $0.00 4. Career Average Minimum Benefit $74,884.38 12 Pension Benefit (Greater of 1, 2, 3, or 4) 13 92. Despite the fact that after bridging service Plaintiff was eligible to receive 14 15 both an Modified CB Benefit and an Redetermined ATB under the express terms of Section

16 3.4(d) of the PTG Pension Plan, the final pension benefit calculation given to Plaintiff by the SBC

17 1 On information and belief, the Special Accelerated Transition Benefit (“Special ATB”) is a benefit 18 which was added at or about the time of the merger of the PTG Pension Plan and SBC Pension Plan in 1999. According to the SMM, an employee who was eligible for an ATB and was employed by an 19 Participating Company on January 1, 1999, was eligible for a Special ATB calculated as follows:

20 The initial value of the Special ATB will be equal to the present value of your regular ATB on January 1, 1999, determined as if you had terminated 21 employment on that date and elected to receive your regular ATB in a lump sum. 22 Your Special ATB will be credited with a full month's interest for each full or 23 partial month before your termination of employment, beginning January 1, 1999 and extending through December 2001, at the rate applicable to your 24 regular Cash Balance Benefit. After December 31, 2001, the amount of your Special ATB will remain frozen. 25 Plaintiff has insufficient information to know to what extent Plaintiff and other members of the Class are 26 eligible for a Special ATB. However, on information and belief, members of the Class, including Plaintiff, are entitled to have the interest provided for under the Special ATB included in any recalculation of any 27 Redetermined ATB the Court determines is owing to them under the terms of the PTG Pension Plan.

28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 25 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 Pension Service Center on July 15, 2004 was based upon CAM Benefit formula under the SBC

2 Pension Plan calculated without consideration for whether Plaintiff was entitled to a 3 Redetermined ATB to adjust for the ATB Discount which was applied to Plaintiff’s ATB at his 4 prior termination. 5 B. The Procedures for Reviewing A Benefit Determination Under the PTG Pension 6 Plan and the Successor SBC Pension Plan 7 8 93. As required under ERISA § 503, 29 U.S.C. § 1133, the PTG Pension Plan

9 and the SBC Pension Plan had provisions (1) requiring that notice be given in writing to any

10 participant whose claim for benefits under the Plans was denied, setting forth the specific reasons 11 for such denial, and (2) affording a reasonable opportunity for a full and fair review of the 12 decision denying the claim. 13 94. Under Section 13.4(b) of the PTG Plan entitled “Rights of Review” any 14 15 participant whose claim for benefits was denied had the “rights of review as are provided in 16 section 503 of ERISA and the related regulation.”

17 95. The “rights of review” referenced in Section 13.4(b) of the PTB Pension 18 Plan include the rights set out in the regulations promulgated by the Secretary of Labor under 29 19 C.F.R. § 2560.503-1(j) (the “Claims Regulations”), which, among other things, require that: 20 In the case of an adverse benefit determination, the notification shall set forth, in a 21 manner calculated to be understood by the claimant--

22 (1) The specific reason or reasons for the adverse determination; 23 (2) Reference to the specific plan provisions on which the benefit 24 determination is based. (emphasis added).

25 96. Sections 3.5.1(c) and 3.5.3(b) of the SBC Pension Plan, which govern the 26 denial and the review of denial of benefit claims, expressly provides that any participant whose 27 claim is denied be provided with an explanation in writing which included the “specific reasons 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 26 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 for the decision and specific references to the pertinent [Plan] provisions upon which the decision

2 is based.” 3 C. The Denial of Plaintiff’s Request For Benefits 4 97. On August 6, 2004, the SBC Pension Service Center sent a letter entitled 5 “Claim Extension Confirmation” (produced in this litigation as QB000232) to Plaintiff requesting 6 7 an additional 90 days in which to respond to the May 5, 2004 Benefit Claim Letter (“Claim 8 Extension Letter”). The Claim Extension Letter stated “[w]e require additional time to research

9 and respond to your claim. A written response will be mailed no later than 90 days from the date 10 of this letter.” 11 98. The Claim Extension Letter did not “indicate the special circumstances 12 requiring an extension of time” to respond to the Benefit Claim Letter as required by 29 C.F.R. § 13 14 2560.503-1(f)(1) of the Claims Regulation. 15 99. On August 18, 2004, Plaintiff sent a letter to SBC Pension Service Center

16 responding to the Claim Extension Letter (produced in this litigation as QB000233) in which 17 Plaintiff requested a written response to his May 5, 2004 Benefit Claim Letter within 10 calendar 18 days as well as “a copy of the retirement documents that you are using to make your decisions on 19 my Benefits.” 20 21 100. On November 11, 2004, the SBC Pension Service Center sent Plaintiff a 22 letter denying Plaintiffs claim (the “Claim Denial Letter”). The Claim Denial Letter stated in

23 pertinent part (produced in this litigation as ATTP00185-187) as follows:

24 As a result of your claim, we have reviewed the facts of your case and all of the 25 evidence provided. We have determined that your request to receive the ATB benefit under the Plan is compliant with Plan provisions. As such, your claim is 26 denied. Please note that all of your service, adjusted for benefits already paid, was used to determine the additional benefit due to you. . . . 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 27 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 101. The Claim Denial Letter quoted and/or referenced Sections 10-20, 10-21 2 and 10-30 of what is described as the “Pacific Telesis Group Cash Balance Pension Plan for 3 Salaried Employees July 1996.” 4 102. On information and belief, the review of Plaintiff’s claim by the SBC 5 Pension Center was based upon the Sections which were quoted and/or referenced in the Claims 6 7 Denial Letter.

8 103. The Sections quoted by and references to the “Pacific Telesis Group Cash

9 Balance Pension Plan for Salaried Employees July 1996” are not quotations or references to any 10 part of the PTG Pension Plan Document (which is the governing document for the PTG Plan). 11 104. On information and belief, the language quoted and the sections referenced 12 in the Claim Denial Letter upon which the SBC Pension Center based its decision to deny 13 14 Plaintiff’s claim comes from the PTG Benefits Binder.

15 105. The Claim Denial Letter did not reference any specific provisions of the

16 PTG Pension Plan Document upon which the denial was based. 17 106. The Claim Denial Letter described the manner in which the Plaintiff’s 18 benefits had been calculated at the time of his final termination in 2004 as follows: 19 At the time of your most recent separation on June 25, 2004, the accumulated value of 20 your Career Average Minimum Benefit (CAM) account, after your rehire, was $75,203.40 (Attachment IV). This was based on a comparison calculation between (1) your CAM 21 benefit which included all service and was offset by the previous age 65 annuity under the ATB and the (2) calculation of your benefit using service since your rehire without an 22 offset. Your winning benefit was the latter of the two, as shown in Attachment IV, which rendered a benefit earned since your rehire under the CAM and was distributed to 23 you on August 23, 2004. Please refer to Attachment IV for specific details on your 24 benefit computation.

25 107. As a former employee of Pacific Bell, the benefits of Plaintiff and other

26 members of the Class were subject to the provisions of the PTG Pension Plan and not the 27 successor SBC Plan. 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 28 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 108. The SBC Pension Service Center based Plaintiff’s benefit calculation on a 2 CAM formula under the SBC Plan, without regard for whether Plaintiff having successfully 3 bridged service under the PTG Pension Plan was entitled to a Redetermined ATB to adjust for the 4 ATB Discount which was applied to Plaintiffs’ ATB at his prior termination. 5 D. Plaintiff’s Appeal of the Denial of Benefits 6 7 109. On January 18, 2005, the law Offices of Dorothy Taylor Cobb sent a letter

8 to the SBC Pension Service Center (produced in this litigation as ATTP00256) appealing the

9 adverse determination of Plaintiff’s claim in the Claims Denial Letter issued by the SBC Pension 10 Service Center (“Claim Appeal Letter”). 11 110. On January 28, 2005, the SBC Pension Service Center sent a letter to 12 Dorothy Taylor Cobb which was entitled “Appeal Receipt Confirmation” (produced in this 13 14 litigation as ATTP00258) confirming that the SBC Service Center had received the January 18, 15 2005 Claim Appeal Letter on January 27, 2005 and advising the Plaintiff that he would “receive a

16 response from the Committee within 60 days from the receipt of your letter.” 17 111. On March 29, 2005, the Secretary of the SBC Plan Benefit Committee 18 (“Benefit Plan Committee”), Christine Holland, sent a letter to Dorothy Taylor Cobb (produced in 19 this litigation as ATTP00259) regarding the Claim Appeal Letter which stated: 20 21 You were notified on January 28, 2005 that a written request for a recalculation of your client's benefit was received on January 27, 2005. You were advised that 22 the appeal would be given a full and fair review within sixty (60) days.

23 An additional sixty (60) days is needed to complete that review. When the review is completed you will be notified in writing of the review decision. 24 25 112. No special circumstances were given by the Secretary of the Plan Benefit 26 Committee in the March 29, 2005 letter for why the 60 day extension of time was required. 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 29 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 113. On April 26, 2005, the Secretary for the SBC Benefits Plan Committee 2 wrote a letter to Dorothy Taylor Cobb denying Plaintiff’s January 18, 2005, appeal of the adverse 3 determination of his benefit claim (“Appeal Denial Letter”). 4 114. Plaintiff has exhausted all administrative remedies available to him. 5 6 115. Plaintiff did not receive a copy of the Appeal Denial Letter from Dorothy 7 Taylor Cobb. Sometime in 2008, after the current action was commenced, Plaintiff obtained a

8 copy of the Appeal Denial Letter from Ronald Roy Johnson, Jr. On information and belief, Mr.

9 Johnson, obtained a copy of the Appeal Denial Letter from the Rule 26(a), Federal Rules of Civil 10 Procedure, disclosures of the AT&T Pension Plan. 11 116. The Appeal Denial Letter, like the Claims Denial Letter, based its 12 determination on Sections 10-20, 10-21 and 10-30, of the PTG Benefits Binder. 13 14 117. The Appeal Denial Letter purported to interpret the PTG Pension Plan

15 Document stating in part as follows:

16 Under the terms of the PTG Plan, if a participant receives a cashout of their ATB benefit and is subsequently rehired, the participant's benefit at their next termination 17 will be the cash balance benefit accrued from the rehire date. Therefore, since Mr. Barnes should not have had an ATB benefit upon his rehire and was only eligible for the 18 cash balance formula under the PTG Plan going forward, your appeal on behalf of Mr. Barnes to restore his ATB benefit once he completed five years of continuous service is 19 denied. (emphasis added).

20 118. By the terms of both the PTG Pension Plan and the SBC Pension Plan as 21 well as 29 C.F.R. § 2560.503-1(j)(2), the Appeal Denial Letter was required to make specific 22 references to the pertinent plan provisions upon which the decision was based. 23 119. The Appeal Denial Letter, however, did not make any “specific references 24 25 to the pertinent [Plan] provisions upon which the decision is based” as it was required to do by

26 the terms of both the PTG Pension Plan and the SBC Pension Plan as well as 29 C.F.R. §

27 2560.503-1(j)(2) of the Claims Regulations. 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 30 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 120. The interpretation of the terms of the PTG Plan regarding the benefit to 2 which a rehired employee is entitled at his or her next termination as set out in the Appeals Denial 3 Letter is inconsistent with requirements of Sections 3.4(d), 3.13, 5.2 and 7.4 of the PTG Pension 4 Plan Documents. 5 As a result of the reliance of the SBC Pension Service Center and the SBC 6 121. 7 Benefit Plan Committee upon the PTG Benefits Binder rather than the PTG Pension Plan

8 Document and the resulting failure to properly calculate the Redetermined ATB rehired

9 employees were eligible to receive under the PTG Pension Plan at their next termination, Plaintiff 10 and, on information and belief, other similarly situated members of the Class have received and 11 will receive in the future thousands of dollars less in pension payments than they were entitled to 12 under the PTG Pension Plan. 13 14 122. The SBC Pension Service Center and the SBC Benefit Plan Committee 15 based the denial of Plaintiff’s claim on provisions of the PTG Benefits Binder rather than the

16 PTG Pension Plan Document. 17 123. As a result of the failure of the SBC Pension Service Center and the SBC 18 Benefit Plan Committee to interpret the PTG Pension Plan Document, neither the SBC Pension 19 Service Center nor the SBC Benefit Plan Committee exercised any discretion in interpreting the 20 21 PTG Pension Plan Document and neither decision is entitled to any deference by the Court. 22 COUNT I

23 FAILURE TO PROVIDE ADEQUATE NOTICE OF SPECIFIC REASONS FOR THE DENIAL OF BENEFITS IN VIOLATION OF ERISA § 503(1) & THE TERMS 24 OF THE PLAN

25 124. Plaintiff repeats and re-alleges the allegations contained in all foregoing 26 paragraphs herein. 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 31 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 125. ERISA § 503(1), 29 U.S.C. § 1133(1) provides, “in accordance with 2 regulations of the Secretary, every employee benefit plan shall . . . provide adequate notice in 3 writing to any participant or beneficiary whose claim for benefits under the plan has been denied, 4 setting forth the specific reasons for such denial.” 5 The applicable regulations provide that “[e]very benefit plan shall establish 6 126. 7 and maintain reasonable procedures governing the . . . notification of benefit determinations.” 29

8 C.F.R. § 2560.503-1(b). Under these regulations any plan’s procedures for notification of benefit

9 determination, in the case of an adverse benefit determination, “shall set forth, in a manner 10 calculated to be understood by the claimant . . . . . Reference to the specific plan provisions on 11 which the benefit determination is based. 29 C.F.R. § 2560.503-1(j)(2) (emphasis added). 12 127. Section 13.4(b)(2) of the PTG Pension Plan Document expressly provided 13 14 that any participant whose claim was denied was entitled to the “rights of review as are provided 15 in section 503 of ERISA and the related regulations" receive notice in writing “specifying the

16 reasons for such decision.” 17 128. Section 3.5.3(b) of the SBC Pension Plan also expressly provided that any 18 participant whose claim was denied was entitled to receive notice in writing of “specific reasons 19 for the decision and specific references to the pertinent [Plan] provisions upon which the decision 20 21 is based.” 22 129. Notice of, and the opportunity to review, the “specific plan provisions” on

23 which a benefit denial is based is necessary for the establishment and maintenance of reasonable 24 procedures for notification of benefit determinations. 25 130. Notice of the specific plan provisions upon which the decision-maker 26 relied in denying a claim provides the claimant with the opportunity to review the adequacy and 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 32 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 accuracy of the claim denial and to challenge the denial if it is unsupported by provisions of the

2 governing plan document. 3 131. Defendant failed to provide notice of the basis of denial in the provisions of 4 the applicable Plan Document and of “the specific plan provisions on which the benefit 5 determination [was] based.” 6 7 132. By basing the claim denial on the PTG Benefits Binder and failing to

8 identify any specific provision of the PTG Pension Plan Document upon which such denial was

9 based, Defendant failed to provide “adequate notice in writing” and violated ERISA § 503(1), 29 10 U.S.C. § 1133(1) and the terms of the PTG Plan and the SBC Pension Plan. 11 COUNT II 12 CLAIM FOR BENEFITS PURSUANT TO ERISA § 502(A)(1)(B) 13 133. Plaintiff repeats and re-alleges the allegations contained in all foregoing 14 paragraphs herein. 15 16 134. ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) provides that a

17 participant may bring a civil action “to recover benefits due to him under the terms of his plan, to

18 enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the 19 terms of the plan.” 20 135. Pursuant to the terms of the PTG Plan, a participant of the PTG Pension 21 Plan who terminated his or her employment with a Participating Company after March 22, 1996, 22 23 and had not reached the age of 55 or did not have 30 years of service credit, received an ATB 24 which was subject to an ATB Discount. In the event such employee was rehired by Pacific Bell

25 and successfully bridged his or her service by working five more years, the employee was 26 entitled, at his or her next termination, to recapture the ATB Discount by receiving a 27 Redetermined ATB that was adjusted to reflect the employees age and term of employment at the 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 33 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 employee’s next termination, offset by the ATB which the employee received at the prior

2 termination. 3 136. In addition to the Redetermined ATB, under the PTG Pension Plan, rehired 4 employees were eligible to receive a Modified CB Benefit based upon the allocations to the 5 employee’s cash balance account from the date of rehire to the date of the next termination. This 6 7 Modified CB Benefit was subsequently frozen by SBC in 2001 and Plaintiff and other rehired 8 employees of Pacific Bell who continued to be employed by SBC were eligible to receive either

9 the Modified CB Benefit under the PTG Pension Plan or the CAM Benefit under the SBC Plan, 10 whichever was greater. 11 137. Under the terms of the PTG Plan, Plaintiff and other similarly situated 12 participants, who were rehired on or before October 31, 1997 and successfully bridged their 13 14 service, were eligible to receive two benefits at their next termination: (i) a Redetermined ATB; 15 and (ii) the greater of a Modified CB Benefits or a CAM Benefit.

16 138. Plaintiff and, on information and belief, other members of the Class, who 17 were rehired and bridged their service, at their next termination, were not given credit for their 18 bridged service and provided a Redetermined ATB as required under Section 3.4(d) of the PTG 19 Plan Document. Instead, they only received the greater of the Modified CB Benefit or the CAM 20 Benefit. 21 22 139. As a result, the benefits for which the Plaintiff and other members of the

23 Class were eligible under the PTG Pension Plan have been calculated in a manner that is

24 inconsistent with the provisions of the PTG Plan Document and the successor SBC Pension Plan, 25 to the extent applicable. 26 140. As such, Plaintiff and members of the Class are entitled to a recalculation 27 of the benefits for which they are eligible in conformity with the provisions of the PTG Pension 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 34 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 Plan, as amended, to include a Redetermined ATB, as well as a Modified CB Benefit or CAM

2 Benefit, whichever is greater. 3 COUNT III 4 VIOLATION OF THE ANTI CUTBACK PROVISION OF ERISA § 204(G) 5 141. Plaintiff repeats and re-alleges the allegations contained in all foregoing 6 paragraphs herein. 7 ERISA § 204(g) provides that “[t]he accrued benefit of a participant under 8 142. 9 a plan may not be decreased by an amendment of the plan.” Under 26 C.F.R. § 1.411(d)-3, “a

10 plan amendment includes any changes to the terms of the plan.” Accrued benefits are considered

11 “reduced” for purposes of ERISA § 204(g) not only when they are decreased in size or eliminated 12 entirely, but also when the plan imposes new conditions or materially greater restrictions on their 13 receipt. 14 143. When the Plaintiff and other members of the Class terminated their 15 16 employment with Pacific Bell after March 21, 1996, Plaintiff and other members of the Class had 17 an accrued benefit under the PTG Pension Plan to receive a Redetermined ATB in the event they

18 were rehired and bridged their prior service by working five more additional years for Pacific 19 Bell. 20 144. To the extent that the accrued Redetermined ATB to which Plaintiff and 21 the members of the Class were entitled under the PTG Pension Plan was modified by a 22 23 subsequent amendment to the PTG Pension Plan, which had the effect of decreasing, eliminating, 24 or imposing new conditions or materially greater restrictions on the Redetermined ATB, such

25 amendment violated ERISA § 204(g), 29 U.S.C. § 1054(g). 26 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 35 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 145. As such, Plaintiff and members of the Class are entitled to a recalculation 2 of the benefits for which they are eligible in conformity with the provisions of the PTG Pension 3 Plan, to include a Redetermined ATB as if no such amendment had occurred. 4

5

6 PRAYER FOR RELIEF 7 8 WHEREFORE, Plaintiff prays that judgment be entered against Defendants on all claims

9 and requests that the Court award the following relief: 10 A. Determining that Defendant failed to comply with ERISA § 503, the regulations 11 thereunder as well as Section 13.4(b) of the PTG Plan and/or Section 3.5.1(c) of the SBC Pension 12 Plan and failed to provide Plaintiff with adequate notice of the reasons for the denial of benefits. 13 14 B. Determining that Defendant’s failure to comply with ERISA § 503, the regulations 15 thereunder and Section 13.4(b) of the PTG Plan and/or Section 3.5.1(c) of the SBC Pension Plan

16 was an abuse of discretion by the SBC Benefit Plan Committee which is not entitled to deference

17 and therefore the interpretation of the pertinent provisions of the Plan on behalf of Plaintiff and 18 the Class are subject to de novo review by the Court. 19 C. Requiring Defendant to comply with ERISA § 503, the regulations thereunder and 20 Section 13.4(b) of the PTG Plan and/or Section 3.5.1(c) of the SBC Pension Plan for all future 21 22 claims. 23 D. Declaring that that Plaintiff and the Class have not had their benefits, including the

24 Redetermined ATB, the Modified CB Benefits and the CAM Benefit, calculated and/or paid in 25 conformity with the terms of the PTG Pension Plan Document and the SBC Pension Plan 26 Document. 27 E. Declaring that Plaintiff and the Class are entitled to have each of the benefits 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 36 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 available to them or potentially available under the PTG Pension Plan and the SBC Pension Plan

2 correctly calculated. 3 F. Enjoining the Plan Administrator of the Defendant from continuing to violate the 4 terms of the PTG Pension Plan and the SBC Pension Plan in the manners alleged or referenced in 5 this Complaint or hereafter proven. 6 7 G. Requiring Defendant to re-calculate the benefit amounts due under the terms of the 8 PTG Pension Plan and the SBC Pension Plan and for the Defendant to pay the difference, plus

9 interest, to or on behalf of Plaintiff and all Class members who received less in benefits or benefit 10 accruals than the amount to which they are entitled and/or to pay benefits to which Class 11 members are entitled in all applicable optional forms (such as lump sum distributions). 12 H. Awarding pre- and post-judgment interest. 13 I. Requiring Defendant to pay attorney’s fees and the costs of this action pursuant to 14 15 ERISA § 502(g)(1), 29 U.S.C. § 1132(g)(1) and ordering the payment of reasonable fees and

16 expenses of this action to Plaintiff’s Counsel on the basis of the common benefit and/or common

17 fund doctrine (and/or other applicable law) out of any money or benefit recovered for the Class in 18 this Action. 19 J. Awarding, declaring or otherwise providing Plaintiff and the Class all relief under 20 ERISA § 502(a), 29 U.S.C. § 1132(a), or any other applicable law, that the Court deem proper. 21 22 23 24 25 26 27 28

COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 37 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW

1 Dated: April 6, 2010 COHEN MILSTEIN SELLERS & TOLL PLLC 2 3 By: /s/ R. Joseph Barton 4 R. Joseph Barton Attorney for Plaintiff 5

6 SPRINGER-SULLIVAN & ROBERTS LLP 7

8 By: /s/ Michelle L. Roberts Michelle L. Roberts 9 Attorney for Plaintiff

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COHEN, MILSTEIN, AMENDED COMPLAINT SELLERS & TOLL - 38 - P.L.L.C. (CASE NO. 08-04058 MHP) ATTORNEYS AT LAW